Increase In Prepaid Tariff Rates Necessitates Importance Of PSU In Telecom Sector

Along with Bharti Airtel and Vodafone Idea, Reliance Jio has also decided to increase their prepaid tariffs by 20%-21%, as per the latest announcement. The revised tariff plans will be effective from December 1. Bharti Airtel was the first telecom operator to announce a tariff increase of 20%-25%, effective from November 26.

The tariff hike of Vodafone Idea followed it with a raise of 20%. Vodafone said in its press release that the new plans would improve the average revenue per user and help address the financial stress faced by the industry. As reported by The Indian Express, rating agency Crisil Ratings said in a report that "the tariff hike announced by a major telecom operator is a much-needed step towards healing the profitability and the returns profile of the sector. It will also enable telcos to invest in rolling out 5G mobile services over the medium term".

Jio has stated that the new plans will strengthen the telecom industry and provide the best quality service at the lowest price worldwide. However, the real question remains that how the middle-class is going to be impacted by this move.

Communication Services: Necessity Not A Luxury

One can notice that the pattern of tariff hikes is almost similar for all three private telecom operators. Being the mainstream telcos, a vast number of Indians depend on Reliance Jio, Vodafone Idea and Bharti Airtel for telecommunication services. Communication is a significant element in the lives of humans who address themselves as social beings, and it is deemed necessary for their growth and development.

People resort to various modes of communication, and in the current scenario, the telecommunication sector is the major one and most important of it all. The grasp of the telecom sector on the Indian population is so widespread that telecommunication services are no longer a luxury but a basic necessity. It has become an indispensable part of Indian lives that the recent tariff hike will drastically affect the population.

The tariff hike will benefit the private telecom operators and improve their business opportunities. But is the hike welcoming in a developing nation like India, where 84 million people live in extreme poverty? The answer would be a big no since telecommunication services have become a significant necessity for people to communicate.

The situation is even worse for daily wage labourers who don't even receive minimum wage. Communication is a significant part of such jobs, and these people depend on the telecommunication sector to communicate with their contractors. However, when the tariff rates are increased, the labourers who find it challenging to make ends meet will find it even more challenging to balance their income and expenditure.

"The plan which was earlier available for ₹399 is now increased to ₹479. It may be an increase of just ₹ 80. Considering the current situation of price hikes in various sectors, the amount increased would add to the burden in a middle-class household", a youngster told The Logical Indian.

Is BSNL Coming To Rescue?

Bharat Sanchar Nigam Limited(BSNL) is a telecommunications sector owned by the Government of India. It falls under the Department of Telecommunications in the Ministry of Communications and has budget prepaid plans compared to private telecom operators. It has a ₹ 199 plan valid for 30 days which provides 2GB of data per day, 100 daily SMS and unlimited voice calls.

Even when all the private sector telecom operators have increased their charges, BSNL being a public telecom sector, haven't increased their tariff rates. BSNL doesn't run after profits like the private sector. However, as reported in The Economic Times, Reliance Jio holds a significant market share of 32.1 percent in the wireless connection services while BSNL has a market share of only 10.3 per cent.

But the real scenario is that the public sector, which should work for the welfare of the public, is itself running at a loss. People don't rely on BSNL services due to the absence of 4G network in many places. Only some areas receive a 4G network, while in many places, BSNL is able to provide only 2G or 3G services. In the fast-moving world, people look at not only the tariff but also the quality of service provided. Many BSNL users have complained that the network is slow, and they cannot make use of the data available due to the slow connection. This makes them rely on private sector telecom operators.

Unlike private sectors, the public sector isn't solely based on profit-making. In India, a strong and well functioning public sector is necessary to support its citizens in the process of growth and development. It necessitates the importance of an efficient and full-fledged public sector. BSNL being a public telecom service, should be made more vibrant, and 4G service should be made available to all parts of India as soon as possible. This can cause people to rely less on private networks like Reliance, Vodafone Idea and Airtel.

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